At least 26 express interest in Canwest papers
At least 26 prospective investors have so far expressed interest in making bids for Canwest newspaper assets, according to documents filed Monday with the Ontario Superior Court of Justice as part of Companies’ Creditors Arrangement Act (CCAA) proceedings.
“As of January 25, 2010, fifteen prospective acquirers and/or investors had executed confidentiality agreements,’ according to an affidavit by Thomas C. Strike, President of Canwest Global and the “LP Entities are currently in negotiations over the terms of confidentiality agreements with eleven additional prospective acquirers and/or investors.”
The current Sale and Investor Solicitation Process (SISP) initiated as part of Canwest’s CCAA filing outlines a seven-week period during which interested parties can kick Canwest’s tires before submitting a formal expression of interest. Any parties whose expressions of interest are approved by a committee of secured creditors get a further seven-week period to come up with a formal bid.
An application to lengthen and make other changes to the rules of this sales process has been made by a committee of unsecured creditors. The court will begin hearing arguments on this application Tuesday (Feb. 2).
An affidavit submitted by the managing director of a New York firm hired as financial advisers to the committee of unsecured creditors argues that the current sales process “merely gives the Secured Lenders the opportunity to obtain what they consider best for themselves” and “favors an all cash bid, over a restructuring transaction that considers all options that are available.”
Mark Hootnick of Moelis & Company also argues that the current sales process gives too much power to the secured lenders. “Giving such power to a small group of the Secured Lenders does not ensure that the sales process will obtain the maximum benefit for all stakeholders. Instead, such a process merely gives the Secured Lenders the opportunity to obtain what they consider best for themselves.”
He also criticizes the timetable for making bids and the involvement of Canada’s big banks. “It will be difficult and time consuming for a bidder to raise in the range of $1 billion and that difficulty will be compounded by the need to ensure that the business will continue to meet the Canadian ownership requirements of the Income Tax Act. That difficulty is further compounded by the fact that the Steering Committee of the Senior Lenders includes all of Canada’s major chartered banks who may be unwilling to support competing bidders if they prefer their own bid.”
Stay tuned. Clearly, a battle between secured and unsecured creditors is taking place over the terms and conditions of the sales process.
Documents filed in the CCAA proceedings can be At least 26 downloaded at: http://cfcanada.fticonsulting.com/clp/
This entry was posted on Monday, February 1st, 2010 at 2:58 pm and is filed under Local News.
